CoreWeave eyes stock derivatives to hedge $35bn chip price risk
AI cloud provider CoreWeave is exploring equity derivatives to protect its massive, debt-financed expansion from a cyclical crash in memory chip prices that suppliers have locked in at elevated rates.
CoreWeave is studying financial derivatives, including put options on memory chip stocks, to shield itself from a potential drop in memory and storage chip prices. The discussions are at an early stage and no trades have been executed. The move is a direct response to the long-term supply agreements the company signed to secure components during this year's severe shortage.
Memory chip prices have roughly doubled this year, straining hardware availability and data centre budgets. To guarantee supply, CoreWeave locked in contracts with makers like Micron and SanDisk that include price floors for the suppliers. If the historically cyclical memory market crashes, CoreWeave will be forced to pay well above the market rate for years.
The financial stakes are immense. Conventional DRAM contract prices jumped 93% to 98% in the first quarter, pushing industry revenue to $97 billion. CoreWeave’s 2026 capital expenditure budget sits between $31 billion and $35 billion, with the low end raised in May specifically because of component prices.
This buildout is heavily financed with debt, though borrowing costs have improved from 10% to 7% over the last six months. Demand is not the immediate concern; the company closed a recent quarter with a $99.4 billion backlog and added Jane Street through a $6 billion cloud deal. “It’s an issue, it’s a problem, but we have an incredible capacity to navigate the supply chain,” chief executive Mike Intrator said.
Creating a direct hedge is difficult because no regulated DRAM futures market exists yet. Proposed contracts from Architect Financial Technologies and Ornn remain stuck awaiting regulatory approval since January. Instead, CoreWeave is looking at equities as a proxy, potentially using instruments like the Roundhill Memory ETF, which gathered $6.5 billion in its first 27 trading days and holds major suppliers SK hynix, Samsung, and Micron.
Hedging a physical input with a proxy stock carries significant risks, a trap that has burned airlines attempting to manage fuel costs. For CoreWeave, the cycle has a clear deadline. Both SK hynix and Micron have indicated that new manufacturing capacity will be fully operational by early 2028, the moment these fixed-price contracts become a heavy financial burden if spot prices collapse.
